国际金融（原书第12版） 教学课件 ppt 作者 大卫.艾特曼（David Eiteman）阿瑟.斯通西 chapter 13

国际金融（原书第12版） 教学 作者 大卫.艾特曼（David Eiteman）阿瑟.斯通西 chapter 13 Multinational Business Finance, 12e (Eiteman, et al) Chapter 13 Translation Exposure 13.1 Overview of Translation Multiple Choice 1) Translation exposure may also be called ________ exposure. A) transaction B) operating C) accounting D) currency Answer: C Diff: 1 Topic: 13.1 Overview of Translation Skill: Recognition 2) ________ exposure is the potential for an increase or decrease in the parent company's net worth and reported net income caused by a change in exchange rates since the last transaction. A) Transaction B) Operating C) Currency D) Translation Answer: D Diff: 1 Topic: 13.1 Overview of Translation Skill: Recognition 3) Translation exposure measures A) changes in the value of outstanding financial obligations incurred prior to a change in exchange rates. B) the potential for an increase or decrease in the parent company's net worth and reported net income caused by a change in exchange rates since the last consolidation of international operations. C) an unexpected change in exchange rates impact on short run expected cash flows. D) none of the above Answer: B Diff: 2 Topic: 13.1 Overview of Translation Skill: Recognition 1 Copyright ? 2010 Pearson Education, Inc. 4) According to your authors, the main purpose of translation is A) to prepare consolidated financial statements. B) to help management assess the performance of foreign subsidiaries. C) to act as an interpreter for managers without foreign language skills. D) none of the above Answer: A Diff: 1 Topic: 13.1 Overview of Translation Skill: Recognition 5) Historical exchange rates may be used for ________, while current exchange rates may be used for ________. A) fixed assets and current assets; income and expense items B) equity accounts and fixed assets; current assets and liabilities C) current assets and liabilities; equity accounts and fixed assets D) equity accounts and current liabilities; current assets and fixed assets Answer: B Diff: 2 Topic: 13.1 Overview of Translation Skill: Conceptual 6) If an imbalance results from the accounting method used for translation, the imbalance is taken either to ________ or ________. A) the bank; the post office. B) depreciation; the market for foreign exchange swaps. C) current income; equity reserves. D) current liabilities; equity reserves. Answer: C Diff: 2 Topic: 13.1 Overview of Translation Skill: Conceptual 7) Generally speaking, translation methods by country define the translation process as a function of what two factors? A) size; location B) a firm's functional currency; location C) location; foreign subsidiary independence D) foreign subsidiary independence; a firm's functional currency Answer: D Diff: 2 Topic: 13.1 Overview of Translation Skill: Recognition 2 Copyright ? 2010 Pearson Education, Inc. 8) A/an ________ subsidiary is one in which the firm operates as an extension of the parent company with cash flows highly interrelated with the parent. A) self-sustaining foreign B) integrated foreign entity C) foreign D) none of the above Answer: B Diff: 2 Topic: 13.1 Overview of Translation Skill: Recognition 9) Consider two different foreign subsidiaries of Georgia-Pacific Wood Products Inc. The first subsidiary mills trees in Canada and ships its entire product to the Georgia-Pacific U.S. The second subsidiary is also owned by the parent firm but is located in Japan and retails tropical hardwood furniture that it buys from many different sources. The first subsidiary is likely a/an ________ foreign entity with most of its cash flows in U.S. dollars, and the second subsidiary is more of a/an ________ foreign entity. A) domestic; integrated B) self-sustaining; domestic C) integrated; self-sustaining D) self-sustaining; integrated Answer: C Diff: 2 Topic: 13.1 Overview of Translation Skill: Conceptual 10) A foreign subsidiary's ________ currency is the currency used in the firm's day-to-day operations. A) local B) integrated C) notational dollar D) functional Answer: D Diff: 1 Topic: 13.1 Overview of Translation Skill: Recognition 11) The ________ determines accounting policy for U.S. firms. A) Securities and Exchange Commission (SEC) B) Federal Reserve System (Fed) C) Financial Accounting Standards Board (FASB) D) General Agreement on Tariffs and Trade (GATT) Answer: C Diff: 1 Topic: 13.1 Overview of Translation Skill: Recognition 3 Copyright ? 2010 Pearson Education, Inc. True/False 1) It is possible to use different exchange rates for different line items on a financial statement. Answer: TRUE Diff: 1 Topic: 13.1 Overview of Translation Skill: Conceptual 2) If the same exchange rate were used to remeasure every line on a financial statement, then there would be no imbalances from remeasuring. Answer: TRUE Diff: 1 Topic: 13.1 Overview of Translation Skill: Conceptual 13.2 Translation Methods Multiple Choice 1) The two basic methods for the translation of foreign subsidiary financial statements are the ________ method and the ________ method. A) current rate; temporal B) temporal; proper timing C) current rate; future rate D) none of the above Answer: A Diff: 2 Topic: 13.2 Translation Methods Skill: Recognition 2) Gains or losses caused by translation adjustments when using the current rate method are reported separately on the ________. A) consolidated statement of cash flow B) consolidated income statement C) consolidated balance sheet D) none of the above Answer: C Diff: 1 Topic: 13.2 Translation Methods Skill: Recognition 4 Copyright ? 2010 Pearson Education, Inc. 3) The basic advantage of the ________ method of foreign currency translation is that foreign nonmonetary assets are carried at their original cost in the parent's consolidated statement while the most important advantage of the ________ method is that the gain or loss from translation does not pass through the income statement. A) monetary; current rate B) temporal; current rate C) temporal; monetary D) current rate; temporal Answer: D Diff: 2 Topic: 13.2 Translation Methods Skill: Conceptual 4) Under the U.S. method of translation procedures, if the financial statements of the foreign subsidiary of a U.S. company are maintained in U.S. dollars, A) translation is accomplished through the current rate method. B) translation is accomplished through the temporal method. C) translation is not required. D) the translation method to be used is not obvious. Answer: C Diff: 2 Topic: 13.2 Translation Methods Skill: Conceptual 5) Under the U.S. method of translation procedures, if the financial statements of the foreign subsidiary of a U.S. company are maintained in the local currency, and the local currency is the functional currency, then A) the translation method to be used is not obvious. B) translation is accomplished through the temporal method. C) translation is not required. D) translation is accomplished through the current rate method. Answer: D Diff: 2 Topic: 13.2 Translation Methods Skill: Conceptual 6) Under the U.S. method of translation procedures, if the financial statements of the foreign subsidiary of a U.S. company are maintained in the local currency, and the U.S. dollar is the functional currency, then A) translation is not required. B) translation is accomplished through the current rate method. C) translation is accomplished through the temporal method. D) none of the above Answer: C Diff: 2 Topic: 13.2 Translation Methods Skill: Conceptual 5 Copyright ? 2010 Pearson Education, Inc. 7) If the European subsidiary of a U.S. firm has net exposed assets of ?500,000, and the euro drops in value from $1.40/euro to $1.30/? the U.S. firm has a translation ________. A) gain of $50,000 B) loss of $50,000 C) gain of $450,000 D) loss of ?450,000 Answer: B Diff: 3 Topic: 13.2 Translation Methods Skill: Analytical 8) If the European subsidiary of a U.S. firm has net exposed assets of ?500,000, and the euro increases in value from $1.30/? to $1.35/? the U.S. firm has a translation ________. A) gain of $25,000 B) loss of $25,000 C) gain of $525,000 D) loss of ?525,000 Answer: A Diff: 3 Topic: 13.2 Translation Methods Skill: Analytical 9) If the British subsidiary of a European firm has net exposed assets of ?250,000, and the pound increases in value from 1.40/? to ?1.45/?, the European firm has a translation ________. A) gain of ?25,000 B) loss of ?25,000 C) gain of ?25,000 D) loss of ?25,000 Answer: B Diff: 3 Topic: 13.2 Translation Methods Skill: Analytical 10) If the British subsidiary of a European firm has net exposed assets of ?250,000, and the pound drops in value from ?1.40/? to euro 1.30/?, the European firm has a translation ________. A) gain of ?12,500 B) loss of ?12,500 C) loss of ?12,500 D) gain of ?12,500 Answer: A Diff: 3 Topic: 13.2 Translation Methods Skill: Analytical 6 Copyright ? 2010 Pearson Education, Inc. True/False 1) Exchange rate imbalances that are passed through the balance sheet affect a firm's reported income, but imbalances transferred to the income statement do not. Answer: FALSE Diff: 2 Topic: 13.2 Translation Methods Skill: Recognition 2) The current rate method is the most prevalent method today for the translation of financial statements. Answer: TRUE Diff: 1 Topic: 13.2 Translation Methods Skill: Recognition 3) The temporal rate method is the most prevalent method today for the translation of financial statements. Answer: FALSE Diff: 1 Topic: 13.2 Translation Methods Skill: Recognition 4) The biggest advantage of the current rate method of reporting translation adjustments is the fact that the gain or loss goes directly to the reserve account on the consolidated balance sheet and does not pass through the consolidated income statement. Answer: TRUE Diff: 2 Topic: 13.2 Translation Methods Skill: Recognition 5) Under the temporal rate method, specific assets and liabilities are translated at exchange rates consistent with the timing of the item's creation. Answer: TRUE Diff: 1 Topic: 13.2 Translation Methods Skill: Recognition 6) The temporal method of foreign currency translation gains or losses resulting from remeasurement are carried directly to current consolidated income and thus introduces volatility to consolidated earnings. Answer: TRUE Diff: 2 Topic: 13.2 Translation Methods Skill: Recognition 7 Copyright ? 2010 Pearson Education, Inc. Essay 1) The two methods for the translation of foreign subsidiary financial statements are the current rate and temporal methods. Briefly, describe how each of these methods translates the foreign subsidiary financial statements into the parent company's consolidated statements. Identify when each technique should be used and the major advantage(s) of each. Answer: The current rate method translates almost all line items from the foreign subsidiary to the parent consolidated statements at the current exchange rate. This is the most commonly used method in the world today. Assets and liabilities are translated at current exchange rate and items found on the income statement are translated at the actual exchange rate on the date of transaction, or as an average over the statement period where appropriate. Equity accounts are translated at historical costs. Any gains or losses caused by translation adjustments are typically placed into a special reserve account (such as a CTA). Thus, gains or losses do not go through the income statement and do not increase the volatility of net income. This is perhaps the biggest advantage to using the current rate method. By contrast, the temporal method assumes that several individual financial statement items are periodically restated to reflect their market value. The temporal method translates individual line items based on monetary/nonmonetary criteria where monetary assets such as cash and marketable securities are translated at current exchange rates, but nonmonetary assets such as fixed assets are translated at historical rates. The gains or losses that result from translation remeasurement are recorded on the consolidated income statement and impact upon the volatility of net income. The temporal method of using historical costs may be more consistent with the practice of carrying domestic items at cost on the financial statements. Diff: 3 Topic: 13.2 Translation Methods Skill: Analytical 13.3 Comparing Translation Exposure with Operating Exposure Multiple Choice 1) ________ occur as a result of changes in the value of currency whereas ________ occur as a result of ongoing business activities. A) Operating gains or losses; Translation gains or losses B) Swap losses; Translation gains or losses C) Translation gains or losses; Operating gains or losses D) all of the above Answer: C Diff: 2 Topic: 13.3 Comparing Translation Exposure with Operating Exposure Skill: Recognition 8 Copyright ? 2010 Pearson Education, Inc. True/False 1) Translation gains or losses can be quite different from operating gains or losses not only in magnitude but also in sign. Answer: TRUE Diff: 2 Topic: 13.3 Comparing Translation Exposure with Operating Exposure Skill: Recognition 13.4 Managing Translation Exposure Multiple Choice 1) The main technique to minimize translation exposure is called a/an ________ hedge. A) balance sheet B) income statement C) forward D) translation Answer: A Diff: 1 Topic: 13.4 Managing Translation Exposure Skill: Recognition 2) A balance sheet hedge requires that the amount of exposed foreign currency assets and liabilities A) have a 2:1 ratio of assets to liabilities. B) have a 2:1 ratio of liabilities to assets. C) have a 2:1 ratio of liabilities to equity. D) be equal. Answer: D Diff: 1 Topic: 13.4 Managing Translation Exposure Skill: Conceptual 3) If a firm's balance sheet has an equal amount of exposed foreign currency assets and liabilities and the firm translates by the temporal method, then A) the net exposed position is called monetary balance. B) the change is value of liabilities and assets due to a change in exchange rates will be of equal but opposite direction. C) both A and B are true. D) none of the above Answer: C Diff: 2 Topic: 13.4 Managing Translation Exposure Skill: Conceptual 9 Copyright ? 2010 Pearson Education, Inc. 4) If a firm's subsidiary is using the local currency as the functional currency, which of the following is NOT a circumstance that could justify the use of a balance sheet hedge? A) The foreign subsidiary is about to be liquidated, so that the value of its Cumulative Translation Adjustment (CTA) would be realized. B) The firm has debt covenants or bank agreements that state the firm's debt/equity ratio will be maintained within specific limits. C) The foreign subsidiary is operating is a hyperinflationary environment. D) All of the above are appropriate reasons to use a balance sheet hedge. Answer: D Diff: 2 Topic: 13.4 Managing Translation Exposure Skill: Conceptual 5) If the parent firm and all subsidiaries denominate all exposed assets and liabilities in the parent's reporting currency this will ________ exposure but each subsidiary would have ________ exposure. A) maximize translation; no transaction B) eliminate translation; transaction C) maximize transaction; no translation D) eliminate transaction; translation Answer: B Diff: 2 Topic: 13.4 Managing Translation Exposure Skill: Conceptual 6) A Canadian subsidiary of a U.S. parent firm is instructed to bill an export to the parent in U.S. dollars. The Canadian subsidiary records the accounts receivable in Canadian dollars and notes a profit on the sale of goods. Later, when the U.S. parent pays the subsidiary the contracted U.S. dollar amount, the Canadian dollar has appreciated 10% against the U.S. dollar. In this example, the Canadian subsidiary will record a A) 10% foreign exchange loss on the U.S. dollar accounts receivable. B) 10% foreign exchange gain on the U.S. dollar accounts receivable. C) since the Canadian firm is a U.S. subsidiary neither a gain nor loss will be recorded. D) any gain or loss will be recorded only by the parent firm. Answer: A Diff: 2 Topic: 13.4 Managing Translation Exposure Skill: Conceptual 10 Copyright ? 2010 Pearson Education, Inc. 7) ________ gains and losses are "realized" whereas ________ gains and losses are only "paper." A) Translation; transaction B) Transaction; translation C) Translation; operating D) none of the above Answer: B Diff: 2 Topic: 13.4 Managing Translation Exposure Skill: Recognition True/False 1) It is possible that efforts to decrease translation exposure may result in an increase in transaction exposure. Answer: TRUE Diff: 1 Topic: 13.4 Managing Translation Exposure Skill: Conceptual Essay 1) Describe a balance sheet hedge and give at least two examples of when such a hedge could be justified. Answer: A balance sheet hedge attempts to equalize the amount of assets and liabilities of a foreign subsidiary exposed to translation risk. Thus, the gain to the firm from a change in exchange rates will be perfectly offset by an equal and opposite loss. Firms may engage in balance sheet hedges under conditions of hyperinflation, or when the subsidiary is about to be liquidated and the value of the CTA account would be realized. The author on page 16 lists other examples. Diff: 3 Topic: 13.4 Managing Translation Exposure Skill: Analytical 11 Copyright ? 2010 Pearson Education, Inc.